Legislature(2019 - 2020)ADAMS ROOM 519
01/28/2020 01:30 PM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB205 || HB206 | |
| Fy 21 Budget Overview: University of Alaska | |
| Fy 21 Budget Overview: Department of Environmental Conservation | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 205 | TELECONFERENCED | |
| *+ | HB 206 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HOUSE FINANCE COMMITTEE
January 28, 2020
1:36 p.m.
1:36:26 PM
CALL TO ORDER
Co-Chair Foster called the House Finance Committee meeting
to order at 1:36 p.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Jennifer Johnston, Co-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
Representative Adam Wool
MEMBERS ABSENT
None
ALSO PRESENT
Jim Johnsen, President, University of Alaska; Michelle
Rizk, Associate Vice President, Statewide Planning and
Budget, University of Alaska; Jason Brune, Commissioner,
Department of Environmental Conservation; Ruth Kostik,
Administrative Services Director, Department of
Environmental Conservation, Office of Management and
Budget, Office of the Governor.
SUMMARY
HB 205 APPROP: OPERATING BUDGET/LOANS/FUNDS
HB 205 was HEARD and HELD in committee for
further consideration.
HB 206 APPROP: MENTAL HEALTH BUDGET
HB 206 was HEARD and HELD in committee for
further consideration.
FY 21 BUDGET OVERVIEW: UNIVERSITY OF ALASKA
FY 21 BUDGET OVERVIEW: DEPARTMENT OF ENVIRONMENTAL
CONSERVATION
1:36:56 PM
Co-Chair Foster reviewed the agenda for the day. He
introduced House Finance Committee staff.
HOUSE BILL NO. 205
"An Act making appropriations for the operating and
loan program expenses of state government and for
certain programs; capitalizing funds; making
appropriations under art. IX, sec. 17(c), Constitution
of the State of Alaska, from the constitutional budget
reserve fund; and providing for an effective date."
HOUSE BILL NO. 206
"An Act making appropriations for the operating and
capital expenses of the state's integrated
comprehensive mental health program; and providing for
an effective date."
1:37:57 PM
^FY 21 BUDGET OVERVIEW: UNIVERSITY OF ALASKA
1:37:57 PM
JIM JOHNSEN, PRESIDENT, UNIVERSITY OF ALASKA, provided a
PowerPoint presentation titled "University of Alaska
Legislative Update" dated January 28, 2020 (copy on file).
He began with slide 3, "Introduction":
State funding cuts from FY 2014 to FY 2019and the
threat of a 41 percent cut in FY 2020have challenged
the university's ability to serve its constitutional
mission for the people of Alaska.
Led by the Board of Regents, the University is facing
the challenge, committed to its mission, to lower
operating expenses, and to investing in programs and
initiatives that serve our students and contribute to
Alaska's future by:
? Developing and diversifying our economy
? Preparing Alaskans for jobs in Alaska
? Conducting research to solve real problems and
create new opportunities
? Increasing educational success through
enrollment and completion
Mr. Johnsen relayed that the impacts of the previous
difficult year would have impacts on the University for
years to come. He underscored that the University had made
it through and was moving forward strongly.
1:39:56 PM
Mr. Johnsen moved to slide 5, "Three-Part Mission":
?Education Delivering academic instruction, career and
technical training
?Research Advancing innovation and discovery through
academic and scientific research
?Service Sharing knowledge to address Alaska's
community needs
Mr. Johnsen addressed slide 6, "Serving All Alaskans Three
Universities - One System":
? 1 legal and financial entity
? 3 separately accredited universities
? 13 community campuses
? 16,700 FTE Students, 24,900 total
? 92 percent of all Alaska higher education
? Affordable: $7,200 (3rd most in US)
? Debt at graduation: 46 percent (2nd lowest)
? Student's cost share: 28 percent (5th lowest)
Vice-Chair Ortiz asked about the 46 percent debt at
graduation.
Mr. Johnsen replied that 46 percent of the graduates had
some debt.
Representative Josephson noted that even though the
achievements were great, the regents repeatedly raised
tuition. He remarked that there was a belief that
continuing to raise tuition might do great harm to the UA
system, because students would leave.
Mr. Johnsen replied it was a bit more nuanced than the
scenario provided. He believed that there were certain
students from certain socioeconomic backgrounds that were
studying certain subject areas that were very tuition
sensitive. He remarked that there were other students,
however that were not tuition sensitive. He felt that a
successful strategy employed by public and private
universities across the country was a high tuition - high
aid strategy. He remarked that the research indicated that
even if the net impact to the student was the same, there
was a positive enrollment benefit if the price was higher,
because of the reputational aspect of the high tuition
rate.
1:44:36 PM
Mr. Johnsen addressed slide 7, "Strategic Goals":
? Contribute to Alaska's Economic Development
? Increase STEM graduates and invention
disclosures
? Provide Alaska with a Skilled Workforce
? Increase UA's share of teacher hires and double
health professionals
? Grow our World Class Research
? Stay number 1 in Arctic Research and increase
research expenditures
? Increase Degree Attainment
? Increase enrollment and completions
? Operate More Cost Effectively
? Decrease cost per completion and increase
completion rate
Mr. Johnsen emphasized the Board of Regent's focus on the
five priorities outlined on the slide. He highlighted the
last item and relayed that cost-effectiveness must be
achieved.
Representative Merrick asked how many degree programs the
University offered.
Mr. Johnsen replied approximately 400. He noted the number
included numerous duplicated programs. He would follow up
with the detail.
Mr. Johnsen noted that there would likely be about 20 fewer
if the board of regents approved the change in February.
Representative Wool asked for verification there had been
more the previous year prior to the cuts.
Mr. Johnsen replied in the affirmative. He relayed the
numbers were dynamic and he would follow up with the
current programs.
Mr. Johnsen moved to slide 8, "Structure":
? One legal, constitutional, and financial entity;
three separately accredited universities with a
governing Board and system office
? Current structure is the result of
consolidation of 11 separately accredited
community colleges in 1987
? That 2-year effort met strong resistance,
spawned legislation, litigation, arbitration and
a voter initiative?and it increased integration
and reduced cost
? System office supports Regents, provides cost
effective system wide services, and focuses
universities on Alaska's statewide priorities
? Non-duplicated system functions include IT, audit,
labor relations, financial/tax reporting, government
relations, debt, treasury, payroll, risk management,
general counsel, procurement, and health/benefits
administration
? University Foundation, Land Management Office, and
Alaska Education Trust are largely self-funded
1:49:32 PM
Mr. Johnsen turned to slide 9, "Statewide Footprint":
? University is largest landlord in State Government
? Are there assets that can be closed, sold or
eliminated? YES!
Representative Josephson asked for the definition of a
facility. He assumed the Hickel Library was a facility.
Mr. Johnsen replied there may be all different kinds of
facilities: facility that was someone's office and there
were small facilities and major facilities such as the
sports facility in Anchorage.
Representative Josephson stated that some may say the
number of facilities was outrageous.
Mr. Johnsen agreed. He mentioned Signer's Hall and
Constitution Hall.
Mr. Johnsen addressed significant activity on slide 11. The
last year had been hard and he believed the University was
successfully moving forward lead by the Board of Regents.
The University had agreed with the governor on a three-year
compact plan, it was still challenging, but manageable. He
continued to review a timeline:
FY20 Legislature includes budget intent language for
Board to consider single accreditation
Aug 13Board of Regents signs 3-year Compact Agreement
with Governor
Aug 20Board terminates Exigency Declaration
Sep 26NWCCU expresses concern over governance and
accreditation
Oct 7 Board ceases consideration of single
accreditation and statewide expedited academic program
reviews
Oct 18 Universities begin campus level expedited
academic program reviews
Oct 30 Board responds to NWCCU concerns
Nov 1 NWCCU confirms UA on "right path" on
governance and accreditation
Nov 22 Board responds to FY20 legislative intent
regarding single accreditation
Dec 3 Board transmits report to Governor and
Legislature per Compact Agreement
Dec 9 Board initiates policy audit clarifying
roles and responsibilities
Jan 17 Board approves 2020 work plan, 5 percent
tuition increase for 2020, including $1.5M of
increased financial aid
Feb 20 Board review of strategic goals and status
of policy review
1:55:07 PM
Representative Josephson discussed that the University had
gone through a great trauma in the preceding year. He noted
that no other agency had faced the same situation. He
commended Mr. Johnsen for getting the University through
the situation.
Representative Carpenter expressed frustration on Mr.
Johnsen's statement that the University was knocked down.
He thought it insinuated that somehow the University was
mistreated. He stated that for years the legislature had
asked the University to cut its costs, but it had not been
done. He elaborated that his constituents who had lost jobs
and been negatively impacted would take issue with the
insinuation that they had knocked the University down.
Mr. Johnsen respected Representative Carpenter's view. He
pointed out that there had been a number of step-downs over
years. The University had over 1,700 employee reductions
since 2014. The University had been trimming substantially.
Representative Sullivan-Leonard thanked Mr. Johnsen for
being present. She asked about an update on the
accreditation, and she was concerned about the teaching
program and the challenge with recruiting teachers in
Alaska.
Mr. Johnsen replied that one of the universities had lost
accreditation, but two of the other universities had
stepped in to help students complete their programs. He
believed it was necessary to look at how the programs were
funded and look at increasing teacher funding.
2:00:36 PM
Co-Chair Johnston asked what the University was currently
paying for termination costs in the pension fund.
Mr. Johnsen would follow up with the information later in
the day.
Co-Chair Johnston thought it would be helpful for the
committee to know how much the University was paying for
termination costs. She would not debate how to frame the
cuts from the previous year, but the termination costs were
the equation used to continue to pay the unfunded liability
in the pension funds. She believed the University was the
hardest hit because it had lost so many employees and it
had been an ongoing process of cutting employees since
2015.
Representative Carpenter appreciated seeing the
information. He noted that constituents in his district did
not have pensions due to working for the private sector.
Co-Chair Johnston understood. She thought it was important
to remember the importance of pensions when in comes to
employee retention.
Representative Wool asked about the various types of
accreditation.
Mr. Johnsen replied there were basically two types of
accreditation. He explained that there was institutional
accreditation. The federal Department of Education
delegated to a number of regional accrediting bodies the
responsibility to ensure quality of universities across the
country. He furthered that in order for the students to
qualify for grants and loans, the university must have an
institutional accreditation. He stated that the other type
was specialized accreditation, which was program specific.
Some of those programs were statutorily required, such as
nursing and teacher education. Others were simply required
as a sign of high quality, such as engineering.
Representative Wool surmised that there were different
accrediting entities.
Mr. Johnsen replied in the affirmative. He explained that
the university was accredited by an entity that oversaw the
region was the Pacific Northwest.
2:07:26 PM
Representative Wool wondered whether UA was still
accredited as an institution.
Mr. Johnsen replied it was the initial licensure programs
that lost accreditation, other programs were fine and
maintained their accreditation.
Co-Chair Foster remarked that the meeting may go long.
Representative Tilton referenced the statement on slide 6
about three universities one system, and queried the intent
of the slide's representation.
Mr. Johnsen replied there was nothing intended by the way
the page had been written.
Representative Tilton queried the status of the
university's land grant deficit.
Mr. Johnsen replied that progress was being made // filling
the University's longtime land grant deficit of 3,600
acres. He explained that in order to enable the conveyance
of the land, and land was included in the definition.
2:10:52 PM
Mr. Johnsen moved to slide 12, "3-Year Budget Compact":
? Agreement between Board and Governor Dunleavy
August 13
? $70M (22 percent) reduction over 3-Yrs versus
single-year cut of $134M (41 percent)
? FY20 $302M (Down $25M or 7.6 percent from FY19)
? FY21 $277M (Down $25M or 8.3 percent from FY20)
? FY22 $257M (Down $20M or 7.2 percent from FY21)
? Best negotiated option for the University of Alaska
? Reduces cumulative 2020-2022 cut from $405M to $145M
? Requires a tremendous internal effort to meet
reduced funding levels
? Secured Governor's support for single appropriation
and other important priorities: AEG and APS
scholarships, WWAMI medical school funding, dual
enrollment and land grant initiative ? UA agreed to
cost savings and revenue enhancement initiatives
2:13:10 PM
Vice-Chair Ortiz asked if there had been a look at how the
University would look after completing the three-year
budget cycle. He wondered what programs would be reduced
and he asked about opportunity costs.
Mr. Johnsen replied it was the precise process the
University was currently undergoing. The board had a
meeting in early June to accept the state's budget and
review and approve continuation, discontinuation, or the
reduction of programs. The top down component were the five
goals he had mentioned [on slide 7].
Vice-Chair Ortiz asked about the details of the process.
Mr. Johnsen would be happy to go through the information
with Vice-Chair Ortiz.
2:15:11 PM
Mr. Johnsen highlighted a bar chart showing the
University's funding history and projection on slide 13. He
noted the FY 20 funding at $302 million and the $257
million in FY 22. He moved to slide 14 and discussed the
funding history and projection by major administrative unit
(MAU). The system budget was roughly 5.5 percent of the
total, and the research mission carried out by the
University was disproportionately undertaken at UAF.
Representative Josephson felt that the slide demonstrated
that there were significant reductions in recent years.
Mr. Johnsen replied that they did not know what the slide
had a different view. He noted the reductions.
Mr. Johnsen advanced to the operating revenue by type and
source on slide 15. The slide showed two pie charts - one
by revenue type and one by revenue source.
Representative Carpenter asked where land grant funds fell
in the chart.
Mr. Johnsen would follow up.
2:19:35 PM
Mr. Johnsen advanced to slide 16 showing two pie charts on
operating expenditures by category.
Representative Wool asked about the research aspect and
return on the $158 million.
Mr. Johnsen answered that about $25 million in state money
(unrestricted general funds) went into research. That money
generated the $158 million.
Vice-Chair Ortiz asked what went into spending behind
institutional support.
MICHELLE RIZK, ASSOCIATE VICE PRESIDENT, STATEWIDE PLANNING
AND BUDGET, UNIVERSITY OF ALASKA, introduced herself.
Vice-Chair Ortiz assumed that academic support paid for
salaries. He wanted to know the expenditures that were
included in institutional support.
Ms. Rizk replied that, for example, the statewide system
office that supported the Board of Regents would be
considered an institutional support category, so there
would be salaries and benefits similar to academic support.
Vice-Chair Ortiz wondered whether the $122 million for
institutional support was primarily intended for salaries
and benefits of administration.
Ms. Rizk answered in the affirmative.
Representative LeBon asked about the pie charts on slide 16
related to athletics.
Mr. Johnsen replied in the affirmative. The number showed
all funds.
Representative LeBon asked how much of the $12.8 million
came from private sources, sponsors, and other.
Ms. Rizk answered that they would follow up with specifics.
Representative LeBon believed the number was close to 50
percent. He asked how much private sector support was
applied for the category.
Mr. Johnsen imagined it was a very small number.
Representative LeBon thought the draw from the University
was likely less than 1 percent.
2:26:09 PM
Representative Wool wondered whether the institutional
support category was for any non-academic staff.
Mr. Johnsen answered that there were administrative people
throughout the different sections. He stated that all the
people were included in the institutional support number.
Representative Wool wondered whether the ticket revenue
collected from athletic events was included in the chart.
Mr. Johnsen replied in the affirmative.
Representative Carpenter addressed institutional support
overhead. He asked what percentage of the item would be
cut.
Mr. Johnsen replied they would provide more information in
the presentation on what had already occurred.
Representative Carpenter wondered whether there was a
political ploy in the budget.
Mr. Johnsen answered that slide 14 showed a good story
related to the question.
Ms. Rizk added that each of the universities conducted both
program and administrative reviews.
Representative Wool recalled the number of programmers
required in the request.
Mr. Johnsen answered that the University had 8 and went
down to 5. The last one had walked out the previous week.
Mr. Johnsen discussed slide 17, "Accreditation":
? UA universities receive their institutional
accreditation from the Northwest Commission on
Colleges and Universities (NWCCU)
? Board took a number of steps in consideration of
legislative intent to move to a single institutional
accreditation
? Board directed UA president to develop plan for
evaluating options
? Convened group of state leaders for advice
? Held workshops across the system and provided
opportunities for input from faculty, staff, students
and the public
? Conducted extensive public opinion survey 3,900
participants
? Even split between those favoring "uniqueness"
and those favoring "integration"
? Established working group to engage NWCCU and U.S.
Dept. of Education on issues and timelines
? On Oct 7, after full consideration, Board ceased
consideration of a single accreditation until UAF
secures its NWCCU accreditation renewal in 2021
? All three universities (including community
campuses) are fully accredited
Mr. Johnsen moved to slide 18, "Academic Program Reviews":
?Board directed UA president to have universities
conduct academic program reviews
?University reviews are underway
?In March 2020, chancellors will provide
recommendations to the president regarding reduction,
consolidation or discontinuation of any programs
?Board must approve any program changes and is
expected to consider recommendations in June 2020
?Teach out obligations and faculty notice periods may
mean financial savings are not achieved until FY22
Mr. Johnsen addressed budget impacts on slide 19, "Budget
Impacts":
?Student support and administrative services have
borne large share of $76M reduction over last 6 years
? HR and procurement restructuring and
integration
Headcount reductions due to attrition and
terminations ? KUAC Radio/TV Base Funding
Reduction
? Fairbanks Administrative Services Building Sale
? Chugach Eagle River Building Lease Non-Renewal
? Kenai Peninsula College Residential Housing
Paused
?$45M additional reduction over FY21-22 will
necessitate significant impacts to academic programs
?Universities aggressively working to achieve FY20
cuts while conducting academic and administrative
program reviews
Vice-Chair Ortiz asked about the pause in the Kenai
Peninsula College (KPC) housing.
2:35:37 PM
Mr. Johnsen replied there was declining participation and
students, which was the impetus for that decision.
Representative LeBon asked for verification that the KCP
housing project had been paused.
Mr. Johnsen answered that the project had been completed,
and were suspending residents in the facility.
Representative Knopp had not been pleased to receive the
call about the pause in the KPC, but understood that
decision. He stressed that there was a quality petroleum
program was at KPC.
Representative Josephson thought of tutoring and counseling
when the graduation rate was not good, and he asked if
there was a correlation.
Mr. Johnsen answered he did not have a specific number, but
there was a correlation. He furthered that if students did
not receive support, they did not continue.
Representative Tilton references slide 9 related to the
number of University facilities. She asked if the
facilities were managed by the land office.
Mr. Johnsen answered that the facilities were usually
managed by the campuses.
Representative Tilton asked about the specifics of the land
management.
Mr. Johnsen agreed to provide that information.
2:39:55 PM
Representative Carpenter stated the University system
brought the housing, and he stated that a growing economy
would benefit KPC. He reiterated that a thriving economy
would hopefully bring demand back to the campus, and bring
the building back online.
Mr. Johnsen advanced to slide 20, "Pushing Continuous
Improvement":
?Diversifying Revenue Sources
?Eliminating Low Demand and Duplicative Programs
?Realigning and Simplifying Business Processes
?Consolidating and Standardizing Administration
?Reforming Program and Service Delivery
?Maximizing Return on Assets
?Reassessing Tuition and Fees
?Reducing Facilities Footprint
Mr. Johnsen reviewed a historical enrollment chart on slide
22. He noted it was not the enrollment story he would like
to be presenting. He pointed out that there was high
unemployment in Alaska that contributed to the decline. The
university was looking at how to modernize processes and
the culture to make things more convenient to deal with.
Representative Carpenter stated that plumbers and
electricians were not traditional degrees, and stressed
that there was not enough skilled labor in the state. He
thought it seemed like the perfect opportunity to shift
from a four-year degree to a certificate system. He hoped
it was part of the discussion going forward.
Mr. Johnsen agreed.
2:46:51 PM
Representative Tilton referenced online programs. She asked
about the current percentage of the University's online
programs. She wondered what it was doing to increase the
programs in the future.
Mr. Johnsen replied that he did not have the specific
number.
Co-Chair Foster offered to bring the University back at
another time if necessary. He asked members to hold their
questions.
Mr. Johnsen reviewed a short history of tuition increases
on slide 23. The information was broken out between
graduate and undergraduate tuition.
Mr. Johnsen turned to slide 24 and showed a chart
highlighting undergraduate tuition and fees compared to
WICHE.
Mr. Johnsen moved to slide 25 and highlighted a chart
showing tuition - student FTE vs tuition/fee revenue.
2:51:51 PM
Mr. Johnsen advanced to slide 26, "Key Data: Workforce":
?UA has 1,727 fewer employees than five years ago
?Since FY14 total workforce has been reduced 21
percent
?MAPTS and K-12 Outreach moved from statewide to
campus
?Regular employees (leadership, faculty and staff) are
down 18 percent and temporary employees (adjunct,
student and temp staff) down 24 percent
?Reductions have been achieved through a combination
of attrition, retirement, ending term contracts, and
eliminating or leaving positions vacant
Mr. Johnsen turned to slide 27, "Key Data Turnover":
? Overall Average Turnover Rate at UA from FY15 to
FY20 was 14.1 percent
? According to the Bureau of Labor Statistics (2019)
annual turnover rate across all industries in the US
ranges between 15 percent and 19 percent
? FY20 to date, we have exceeded FY19 in turnover of
administrators and are nearing the FY19 totals for
staff and faculty
Mr. Johnsen looked at slide 28, "Key Data: Voluntary
Turnover":
? Voluntary turnover includes retirements, departures
for other opportunities, and other categories such as
medical necessity
? The overall average voluntary turnover rate for all
employees in the University of Alaska System from FY15
to FY19 was 11.1 percent
? Comparable Peer Institutions: 7 percent Weber State
Univ and 9 percent West Florida Univ
Mr. Johnsen moved to slide 30, "2020 Legislative
Priorities":
? Operating Budget
? Year 2 compact funding - $277M
? Single appropriation structure
? Capital Budget
? $50M Deferred Maintenance (backlog exceeds $1.2B)
? $2.5M Alaska Earthquake Center (USArray)
? Debt Service Relief
? Significant fixed operating cost - $28M annually
? Principal outstanding - $297M
Mr. Johnsen addressed slide 31, "2020 Legislative
Priorities":
? Technical Vocational Education Program (TVEP)
? Program expires this year (June 2020)
? Funded through payroll deductions $12.4M in FY20
? Funds high-demand career and technical training
? UA receives 45 percent of program dollars $5.6M in
FY20
? Dual Enrollment
? Expansion of High School/College enrollment
Alaska Higher Education Investment Fund
? Alaska Performance Scholarship Program: $12M
Alaska Education Grant: $6M ? WWAMI Medical School
Program $3M
Mr. Johnsen displayed slide 33, "Conclusion":
The University of Alaska appreciates your support as
we move forward, committed to serving our mission, to
lower operating expenses, and to invest in the
programs and initiatives that provide opportunities
for our students and contribute to Alaska's future by:
? Developing and diversifying our economy
? Preparing Alaskans for jobs in Alaska
? Conducting research to solve real problems and
create new opportunities
? Increasing educational success through
enrollment and completion
Co-Chair Foster asked about debt service relief on slide
30. He noted the principal outstanding debt of roughly $297
million.
Mr. Johnsen replied that the preference was the first
scenario because of the recurring impact.
Co-Chair Foster asked if there was a specific number the
university was hoping for.
Mr. Johnsen replied zero. The University would work with
the legislature on the issue.
Representative Josephson asked about the engineering
program credit hours.
Mr. Johnsen answered that it was a challenge but also a
tremendous opportunity. He did not have the exact credit
hours, but the number was high
3:00:52 PM
Representative Wool asked about the difference in instate
and out of state tuition. He asked for the percentage of
out of state students.
Mr. Johnsen answered it was common to charge out of state
tuition. He stated that roughly 10 percent of the students
were from out of state, so the increment was significant.
One of the recruitment initiatives was to step out of state
more aggressively.
Representative Wool stated that if it was 10 percent of
students, then it would be a significant tuition revenue.
He felt that there may be an initiative to decrease the out
of state tuition if the recruitment of out of state
students was successful.
3:03:26 PM
Representative LeBon had come to Alaska for school and had
stayed in the state. He asked what the University received
from the private sector, individuals, and businesses. He
did not know if there was a way to present how the trend
lines had changed over the past 10 to 15 years.
Mr. Johnsen would be happy to provide the information. The
University had received slightly over $100 million in the
past 10 to 15 years.
Co-Chair Foster thanked the University for their time.
^FY 21 BUDGET OVERVIEW: DEPARTMENT OF ENVIRONMENTAL
CONSERVATION
3:05:40 PM
JASON BRUNE, COMMISSIONER, DEPARTMENT OF ENVIRONMENTAL
CONSERVATION, provided a PowerPoint presentation titled
"Department of Environmental Conservation: House Finance
Committee" dated January 28, 2020 (copy on file). He began
on slide 2, "Our Values":
We strive to provide excellent Customer Service both
inside and outside of the organization by being
professional, responsive, reliable, and respectful.
We are accountable for our actions and stand proudly
behind our work, as individuals and as an
organization.
We perform to the highest moral and ethical standards,
and produce transparent and consistent regulatory
actions to show our Integrity.
We support and encourage collaboration across programs
and partners to meet challenges and further our
collective mission.
We make objective decisions, based on science and
facts.
Commissioner Brune explained the main areas of focus for
the department including air quality; water quality;
environmental health; and spill prevention and response.
Commissioner Brune reviewed the operational chart briefly.
Ms. Brown relayed that the ultimate goal was to maintain
strong regulatory agencies. The proposed budget was
effectively flat.
3:08:49 PM
RUTH KOSTIK, ADMINISTRATIVE SERVICES DIRECTOR, DEPARTMENT
OF ENVIRONMENTAL CONSERVATION, OFFICE OF MANAGEMENT AND
BUDGET, OFFICE OF THE GOVERNOR, introduced herself and
indicated that the chart showed the proposed budget. She
identified the various colored areas.
3:10:06 PM
Ms. Kostik looked at slide 7, "DEC FY2021 Operating Budget:
Significant Changes":
Eliminate Dairy Program
.notdef Governor proposed elimination in FY2020
.notdef Legislature restored funding, replacing $15.0 to be
paid by the industry
.notdef Legislative intent for the Department to pursue fee
schedule
.notdef Current permittees include 1 bovine dairy, 1 goat
dairy, and 1 bottle manufacturer
.notdef Conversations with industry indicate any meaningful
fees would not be economically feasible
.notdef Reduce $179.6 and 1 position
.notdef $164.6 UGF
.notdef $15.0 statutory designated program receipts
Co-Chair Johnston asked about the program as it related to
the federal government.
Ms. Kostik responded that the program was required by the
federal government, but the federal government did not have
a federally run dairy program.
3:12:32 PM
Representative Knopp expressed being perplexed about what
the state was trying to do. The Kodiak dairy currently
employed 12 people. He wondered about the reasoning for the
closure.
Commissioner Brune responded that the question remained
regarding what the state could continue to pay for. He
stated that the plan was still in place to close the dairy.
3:14:20 PM
Representative Knopp offered that he had asked the
subcommittee about shifting some of the funds. He suggested
having a conversation with the commissioner.
Commissioner Brune responded that he would welcome a
conversation regarding wastewater.
3:15:55 PM
Ms. Kostik looked at slide 8, "DEC FY2021 Operating Budget:
Significant Changes":
Reduce Commercial Shellfish Testing Subsidy
.notdef Legislature fully subsidized required testing in
FY2009
.notdef Commercial industry does not currently pay the
existing fee for analytic testing
.notdef Industry does bear the cost to collect and ship
samples
.notdef Testing is required to participate in commercial
shellfish markets
.notdef Direct cost to State for shellfish testing is $457.7
.notdef Additional $269.0 to operate the permitting program
.notdef Industry contributes roughly $56.7 in permit
fees
.notdef Replace $457.7 Commercial Passenger Vessel
Environmental Compliance fees for testing
.notdef $228.8 UGF
.notdef $228.9 general fund program receipt
Vice-Chair Ortiz asked if DEC had talked to industry about
the planned reduction in the shellfish testing subsidy.
Commissioner Brune answered in the affirmative.
Vice-Chair Ortiz wondered where the commercial passenger
vessel funds would be spent.
Commissioner Brune replied that the request would be coming
later in session
Ms. Kostik noted that in a few slides they would discuss
where they were replacing the funds within the Division of
Water in the coming year.
Vice-Chair Ortiz stated that industry did not pay for
actual testing, but they would have to pay for operating
costs.
Commissioner Brune agreed.
Vice-Chair Ortiz asked about when the department had spoken
to SARDFA, and the cost of the program.
Ms. Kostik replied $228,000.
Vice-Chair Ortiz asked if industry could absorb the cost
and was it amenable to the change.
Commissioner Brune replied that any industry that would
have increased cost was not enthusiastic. He stated the
discussion needed to occur and he would continue to examine
the issue.
Vice-Chair Ortiz was hearing a desire to increase the
mariculture industry and shellfish production. He thought
there was an increase demand for services in the state. He
asked how the reduction played into the overall goal of
trying to expand the economy.
Commissioner Brune answered that the governor wanted to
expand the economy, and support was important in the
infancy of an industry, but at some point, it needed to
decrease the costs. He stressed that the governor was very
interested in the growing the industry for the state
3:24:15 PM
Vice-Chair Ortiz believed it was the department's
assessment it was inappropriate to use the cruise ship
passenger vessel fees in this way. He asked how long it had
been taking place.
Ms. Kostik replied she believed it had been since either FY
15 or FY 16.
Commissioner Brune added that the administration was
interested in truth in budgeting, and believed the funds
should come from general funds.
3:25:39 PM
Co-Chair Foster stated his understanding that the proposal
would be to increase testing capacity and permits.
Ms. Kostik answered that in FY 19 the permitting program
issued 292 permits.
Co-Chair Foster asked how many had to do with the actual
testing.
Ms. Kostik answered that in FY 19 the department had tested
596 samples.
Co-Chair Foster requested follow up on the number of
entities.
Representative Wool asked for verification that the
department was proposing a split, and assumed the tested
samples were paid by the business owner.
Representative Josephson commented that the Dunleavy
administration benefited from the legislature's repeal of
the oil and gas tax credits.
Vice-Chair Ortiz stressed that currently the program used
CPV funds and did not currently a draw on UGF.
Vice-Chair Ortiz thought it was not appropriate to have the
cruise ship industry pay for the testing necessary for
another industry. He asked if the cruise ship industry had
complained about the issue.
Commissioner Brune answered in the negative. He stressed it
was a truth in budgeting issue.
3:30:41 PM
Ms. Kostik advanced to slide 9, "DEC FY2021 Operating
Budget: Significant Changes":
Reduce Prevention Account Expenditures
.notdef Prevention Account funded by
.notdef $0.04 per barrel of crude oil
.notdef $0.0095 per gallon of refined fuel
.notdef Fund projected to run a deficit as early as FY2024
.notdef Stop regulation of Class II facilities and reduced
capacity in Training and Guidance unit, Contaminated
Sites, and administrative support
.notdef Reduce $1,019.1 and 7 positions
.notdef $643.5 prevention account
.notdef $375.6 federal receipts
.notdef Increase $375.0 oil/haz interagency receipts to
reflect average annual personal services charged to
emergency response account
Co-Chair Foster asked what types of tank farms she was
referring to. He asked if they were in small communities.
Ms. Kostik would have to follow up on the question.
Commissioner Brune added they were tanks that did not
require contingency plans.
Representative Josephson stated that the Environmental
Protection Agency's budget had been slashed. He asked what
that meant - he wondered if someone from the EPA would
inspect the tanks.
Ms. Kostik would have to check with the program to see what
the EPA would do. She noted the facilities were relatively
low risk. They had identified the list of class two
facilities.
Representative Josephson noted that the state did not have
primacy over the regulation.
Ms. Kostik affirmed.
Representative Josephson stated his concern that the state
under regulated. He recalled the 9 mile plume and the need
for potable water in North Pole. He would like assurance
that the change was acceptable.
Ms. Kostik clarified that DEC had been regulating and
providing assistance. She stressed that it was misstated on
the slide.
Commissioner Brune added there was a consideration of Flint
Hills.
Representative Josephson had been happy to see that. He
noted that the previous SPAR director had concerns about
using SPAR funds.
Commissioner Brune understood the concern, and stated that
the goal was to reach $50 million in case a spill occurred,
especially if there was not a responsible party. There was
He noted that a situation in Wrangell had no responsible
party and the state would not see the funds again.
3:39:03 PM
Representative Wool referenced the $0.04 per barrel of
crude oil and $0.0095 per gallon of refined oil, and
queried the link to hydrocarbons.
Commissioner Brune answered it was not linked to
hydrocarbons.
Representative Wool asked if it was called a spill - it had
been intentionally dumped and the impact had only been
identified after the fact.
Commissioner Brune answered it was a great point and he was
trying to grasp the issue. He stated it was classified as a
spill, and they would develop a plan to remediate and make
drinking water safe.
Ms. Kostik added that the statutory language talked about a
release and not necessarily a spill.
Representative Wool asked if there was discussion about a
state limit for use of pfas.
Commissioner Brune agreed. He was happy to further discuss
the issue later on.
Representative Wool referred to the 70 parts per trillion,
which was the EPA lifetime exposure. He wondered whether it
was only an additive of the toxic elements.
Commissioner Brune answered that the department continued
to examine, but the focus was currently on the two
individual compounds.
Ms. Kostik continued to discuss slide 9.
3:45:41 PM
Commissioner Brune added that it was important to determine
the programs that did not need legislative appropriation to
access the funds for emergencies.
Ms. Kostik turned to slide 10, "DEC FY2021 Operating
Budget: Significant Changes":
Regulate Wastewater in Port Communities
.notdef 1.2 million cruise ship passengers in 2019
.notdef Increased daily load in the summer has significant
impacts on systems
.notdef Replace $454.6 UGF with Commercial Passenger Vessel
Environmental Compliance fees
3:46:44 PM
Ms. Kostik advanced to slide 11, "DEC FY2021 Operating
Budget: Significant Changes":
Transfer Monitoring of Cruise Ship Air Emissions
.notdef Moves enforcement from Division of Water to Division
of Air Quality
.notdef Activities include
.notdef Opacity readings
.notdef Ambient air monitoring
.notdef Complaint response
.notdef Transfer $312.6 Commercial Passenger Vessel
Environmental Compliance fees and 1 position
.notdef No increase to costs .notdef No change in services
Vice-Chair Ortiz asked about the monitoring that took place
for cruise ship air emissions in port communities.
Ms. Kostik answered that there was an opacity reading that
was based on the emissions coming from the smokestack of
cruise ships. she remarked that the color was important to
determine the level of pollutants in the emissions.
Vice-Chair Ortiz surmised an individual within DEC did the
review.
Ms. Kostik believed so and she would follow up.
Commissioner Brune answered there was an approved
methodology for the program.
Vice-Chair Ortiz asked if the test happened every time a
cruise ship came into a port.
Commissioner Brune would follow up. He did not know the
frequency of testing.
3:49:24 PM
Ms. Kostik moved to slide 12, "DEC FY2021 Operating Budget:
Significant Changes":
Increase Inspections for Alaska Pollutant Discharge
Elimination Systems (APDES) Program
.notdef Primacy over portion of Clean Water Act
.notdef Permits all major industries in Alaska
.notdef Alaska received failing grade in recent EPA review
due to staffing deficiencies
.notdef EPA conducting inspections on DEC's behalf
.notdef RPL approved in December added $430.0 Fed to fund 4
new positions in FY2020
.notdef Increase $573.0 Fed and positions funded in RPL
.notdef Increased inspections by DEC staff
.notdef Improve program performance
3:50:28 PM
Vice-Chair Ortiz would have questions on the Ocean Ranger
slide. He held the last slide for a later time.
Commissioner Brune offered to meet with individuals on the
committee
Representative LeBon thanked the commissioner for traveling
to Fairbanks and the Chamber of Commerce on the air quality
challenge that had existed for a number of years.
3:52:29 PM
AT EASE
3:53:12 PM
RECONVENED
HB 205 was HEARD and HELD in committee for further
consideration.
HB 206 was HEARD and HELD in committee for further
consideration.
Vice-Chair Ortiz reviewed the meeting for the following
day.
ADJOURNMENT
3:53:40 PM
The meeting was adjourned at 3:53 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 01.28.2020 HFC Department Overview.pdf |
HFIN 1/28/2020 1:30:00 PM |
DEC Overview HFIN |
| 2019 08 13 UA-SOA-Compact.pdf |
HFIN 1/28/2020 1:30:00 PM |
UA Document re:Overview HFIN |
| 2019 11 22 Buretta to Ms. Sanders Response to the Legislative Intent Language.pdf |
HFIN 1/28/2020 1:30:00 PM |
UA Document re:Overview HFIN |
| 2019 09 13 Gov Dunleavy AK Delegation Land Grand Ltr.pdf |
HFIN 1/28/2020 1:30:00 PM |
UA Document re:Overview HFIN |
| 2019 12 03 Buretta to Gov Dunleavy_FY20 Compact Report.pdf |
HFIN 1/28/2020 1:30:00 PM |
UA Document re:Overview HFIN |
| 2020 01 28 UA House Finance Committee Final.pdf |
HFIN 1/28/2020 1:30:00 PM |
UA Overview - HFIN |
| 02.05.2020 - DEC Response to HFC 01.28.2020 Questions.pdf |
HFIN 1/28/2020 1:30:00 PM |
DEC Overview Response |